M-NCPPC looks to even out its structural deficit

UPPER MARLBORO – The Prince George’s County section of the Maryland-National Capital Park and Planning Commission (M-NCPPC) has run a structural deficit for at least the last six years, but through several strategies, the commission expects to even out expenditures and revenues by 2024.

Over the past few weeks, the commission has held listening sessions to gather information about what county residents want to see in the M-NCPPC budget. And while residents have come out to ask for new parks, new facilities, increased programs and assurances of safety, the commission has continued to look for ways to keeps costs down while increasing services.

At the Prince George’s County Planning Board’s Sept. 28 meeting, the board’s commissioners sat for a briefing on the beginning of the fiscal year 2019 budget process from M-NCPPC Corporate Budget Manager John Kroll, who walked the board through the commission’s six-year plan.

“As you’re all aware, we had a housing crisis. Property values dropped. We lost revenue. We’re coming back, but we’re not quite back yet,” he said. “The key, that I like to concentrate on, is that all funds are projected to balance in fiscal year ‘19. This is in part (due) to the tax rate that was increased by the (county) council for fiscal year ‘16.”

The M-NCPPC budget is funded largely through property taxes, which accounts for 85 percent of the funds the commission is given. The commission has struggled financially since the crash of the housing market and the significant drop in property values in the county. Revenues have lagged behind the expenditures needed to keep up county programs and improve parks but, Kroll said, they have worked on a plan to address the deficit.

The main idea, he said, is that over the next six years, the commission will not only benefit from a growing tax base and a rise in property value, but will move around fund balance reserves, addressing critical needs first, and moderate future expenditure increases.

Through this plan, Kroll said he expects the organization to balance out its spending and income by 2024.

“We do project balances in each of the funds (this year), but the structural deficit does continue,” he said.

However, bringing costs down or waiting for revenues to go up is not quite as simple as it may sound. While revenue for the commission increased by $47 million since fiscal year 2014, revenues are still $11 million shy of what they had been in 2010. In addition, costs have increased by way of employee benefits and pay, increases in project demands, and increases in services.

Kroll noted that because a “large portion” of the budget is reserved for personnel costs, M-NCPPC’s budget is most affected by changes in wages, health insurance, other post-employment benefits (known as OPEB), and retirement. The other piece of the commission’s budget is focused on capital programs and services for the community. A major point Kroll made is that M-NCPPC continues to work toward reducing its project charges, which represents a “collaborative relationship where the commission funds services delivered by the county.”

From 2008 until 2012, the commission saw its project charges increase more than 350 percent from $5 million to $21 million a year. Project charges have steadily decreased since then to roughly $13 million in fiscal year 2018.

“We did better in fiscal year ‘18 in alleviating some of that. We hope, too, that the county is able to address that again successfully this year,” Kroll said.

However, the commission relies on its fund balance to make up the large deficits in each section, which includes administration funds, park funds and planning funds.

In the administrative section, there is an approximate $4.1 million gap between revenues and expenditures. For parks, the gap is around $5.6 million and there is a $9.5 million gap in planning, all according to preliminary estimates from M-NCPPC.

To that effect, M-NCPPC projects it will “spend down” its reserves, known as the fund balance, severely in the next decade. The commission’s projections estimate the fund balance for the administrative fund will drop from approximately $36 million to $14 million in 2024. The park’s fund balance total will drop from $106.2 million to roughly $31 million in 2024, while recreation will decrease from $34 million to $2.8 million.

Kroll said most of the spending down is to address growing infrastructure needs in the park’s department and noted that the commission hopes to move $2 million from the administrative fund balance to the park’s one.

“And the recreation fund is starting to do the same,” he said. “To utilize some portion of the recreation fund, fund balance to address the infrastructure needs for the recreation facilities.”

Budget talks will continue this month, as individual departments of M-NCPPC will make their budget presentations and requests on Oct. 19. The Spending Affordability Committee will meet in November and the planning board will likely approve department budgets in that same month.

Commission approval of the fiscal year 2019 proposed budget is expected Dec. 20 and it will forward the proposed budget to the county executive by Jan. 15.